Whitegoods manufacturer Fisher & Paykel, which has a manufacturing plant on the outskirts of Brisbane, should enjoy the same benefits Australian producers will reap from the Australia-US free- trade pact.
While the market waits for the two countries to reveal full details on the “rules of origin” on which manufactured goods will be covered by the agreement, consensus is growing that, for New Zealand manufacturing at least, the deal is not the end of the world as we know it.
“As the Australian economy booms there will be more and more opportunities generated for New Zealand,” Chris Mackay, executive director of the Australia NZ Business Council, said. “The jury will be out until we see the trade statistics in a few years, but my bet is that they’ll be favourable, and for everybody.”
Access to manufacturing is one of the main thrusts of the deal, with two-way tariffs on manufactured goods abolished from the day the agreement is expected to come into force in January 2005.
The only caveat is that only goods which are Australian made and pass the “rules of origin” test will be exempt from US tariffs, while the US will be able to source the goods it sells from the Nafta (Canada, Mexico and the US) zone or beyond.
Practically, however, this will mean little to a New Zealand manufacturing champion such as Fisher & Paykel.
Not only does it have a manufacturing facility in Cleveland, outside Brisbane, but it has just entered a distribution alliance with US giant Whirlpool, which probably gives it more advantages than any trade deal. And with the Australian dollar, despite its recent gains, still not even worth 80USc, New Zealand is likely to retain its competitive advantage over any competing US manufactured goods into the foreseeable future.
“I just don’t see it as being an issue on either side of the ditch,” Mr Mackay said.
People concerned about Australian ownership of New Zealand banks can also rest easy if they fear a US takeover: one of the concessions extracted by Canberra was a ban on any US acquisition of one of the big four Australian banks.
The New Zealand processed food industry, however, has more justification for any concern.
Modelling by Melbourne-based think tank the Tasman Institute last year, which assumed the full removal of bilateral tariffs between Australia and New Zealand by 2010 which is not exactly what has been agreed to predicted a 2.7% fall in New Zealand processed food exports to Australia over the years to 2015.
Aggregate export volumes would fall by 0.082% over the same period, the institute’s modelling found. But even if the modelling is correct, it will not produce to use Finance Minister Michael Cullen’s phrase the “big bang” everybody had feared.
From New Zealand Business Review